Stock pick: Havells India a good buy?

by khalid on 01/10/2011 · 0 comments

Havells is a thirty years old company which has been in the electrical component manufacturing space and is a system maker with a predominance of its products in terms of switchgears and cables. It product are like Crompton Greaves, the company’s major competitor in this sector.

Havells have completely changed their business strategy after the Sylvania acquisition. The acquisition was one of the major global acquisitions and Sylvania is considered among the major top three lighting manufacturers globally. Initially the acquisition has given them a big nod but now it is paying off. Sylvania results will definitely add to the bottomline and topline of the company. The company has a global presence in 52 countries.

Havells is also trying to move in the consumer electrical space where it will be competing with Bajaj and Crompton. These companies are moving out from this space because of cost pressure. A Lower cost of production will help them to quickly capture the market. Presently Havells have 15 percent market share in this space and with Crabtree coming into their portfolio.

Crabtree is the most respectful system manufacturers of home equipment system. The financial performance of last quarter was not as per expectation because of high input cost and because of negative sentiments on the global business. Looking forward the company’s growth seems to be attractive having the highest CAGR in this business. Presently the stock is trading around 360 levels and EV to sales is pretty low at .78. With a PE of 11-12 the company should be trading at 500 levels. People can do invest in this company with the kind of growth the company is marching forward.

“Bell the Bull says: Sylvania Crabtree’s has brought over 15 % market share in the consumer electrical space.”


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